At the annual Nokia Capital Market Days in New York, Nokia senior management set out clear targets and milestones to hone existing and build new competitive advantages for continued leadership in the mobile communications market amid increased competition from rivals Motorola Inc., Samsung Electronics Co. and Sony Ericsson, especially in the clamshell sector. In general, plans include the release of 40 new handsets to the market next year.
The Finnish company, which has promised to launch a total of 35 new handsets in 2004, is trying to regain market share after gaps in its product range allowed competitors like Samsung and Sony Ericsson to step in the nokia's previously dominated sector of the mid- to high-end range of phones.
Nokia's plans include a 10 percent growth in 2005 from the 630 million units it expects to be sold in 2004 and to grow also in value, but to a lesser extent. Its long-term market share goal to the annual 2008 is estimated to 40 percent, namely more than 600 million camera phone units and more than 200 million smartphone units. Nokia also expects the global mobile subscriber base to surpass two billion users in 2006 and the overall mobile infrastructure market in 2005 to be slightly up compared with 2004 in euro terms.
The Finnish company's main targets are somewhat faster than market growth in mobile devices and infrastructure. The medium term (two to three years) goal is to achieve a mobile device operating margin of 17% - 18% and an infrastructure operating margin of 14%. Enterprise Solutions is planned to reach breakeven in the first half of 2006 and to bring overall Nokia R&D expenditure down to 9% - 10% of net sales by the end of 2006.
Nokia presented five priorities to strengthen its market leadership: 1) product competitiveness, 2) customer satisfaction, 3) R&D effectiveness, 4)demand-supply network alignment, 5) end-to-end capability.
1) Nokia aims to increase its competitiveness by broadening its product portfolio and launching approximately 40 new mobile devices in 2005. Variety in Nokia's offering will be enriched in 2005 when approximately two-thirds of Nokia's mobile device launches are targeted to have cameras and more than half are expected to be clamshells, slides and other non-monoblock models.
2) The company is committed to meeting customer needs in mobile devices and mobile infrastructure. Nokia is collaborating with operators on product planning as well as accelerating product hardware and software customization programs designed to drive a competitive advantage. Of the mobile devices Nokia plans to ship in 2005, approximately 90% will support software customization and nearly a quarter will have operator-exclusive hardware designs.
3) "Our goal is to bring Nokia's overall R&D expenditure down to 9% - 10% of net sales by the end of 2006 with increased focus and efficiency gains to be achieved by reducing cycle time by approximately 50% to get the most compelling products to market at the right time," said Ollila.
4) In order to better capture potential upside in high-demand situations Nokia intends to further align its demand-supply network.
5) Nokia aims to systematically leverage its end-to-end capability by integrating mobile devices, applications and infrastructure.
"Industry dynamics have shifted, and we have been adapting our mindset, customer approach, product portfolio and technologies to sharpen our competitive position," said Jorma Ollila, Chairman and CEO, Nokia.